Easy as 1..2..3G

Chinese telecoms companies such as Huawei and ZTE have steadily stolen a march on their erstwhile global competitors on domestic soil, and they look set to repeat that feat on the international stage.

In 2002, for example, ZTE realised US$1.33 billion in sales, an 18% increase over 2001. Its half-yearly report on Aug 12, 2003 showed revenues at RMB5.86 billion (US$708 million), with a net profit of RMB194.78 million (US$23.5 million), demonstrating an increase of 48% for revenues over the same period the previous year, and an increase in 45% in net profit over the same period last year.

ZTE is listed on the Shenzhen Stock exchange, and claims to be the only company that can offer wireless solutions end-to-end, from switching to terminals, with key products in four areas: data, multimedia, optical, and wireless communications.

The equipment provider has products in over 20 countries, and China s president Hu Jintao has urged ZTE to speed up its globalisation strategy, with government support.

Interestingly, its wireless division is leading the global charge. Ye Wei Min, vice-president and general manager, Mobile Communication Products Division, ZTE, shares their plans.

How has the wireless division performed so far?
In 2002, total revenues topped out at RMB16.8 billion (US$2 billion), and the bulk of that was from wireless products. The target for 2003 was to exceed RMB20 billion (US$2.42 billion). In 2003, the ratio of wireless products made up 70% of revenues, and 27% of products in the wireless revenue portfolio were GSM/ CDMA/PHS handsets.

We re looking at next-gen offerings. There are two ways to migrate from 2G to 3G: GSM to UMTS, and CDMA95A to CDMA2000. We can provide commercial systems for 2G to 3G, and we can offer mass production of GSM/CDMA systems.
We ve already penetrated 25 out of 31 provinces in China, and over 20 countries.

Our products can support more than 30,000 transceivers in the market, and can support 5 million subscribers globally. Our SMSC can support up to 30 million subscribers.

In Shanghai, China s biggest city, Shanghainese mobile operators adopted ZTE s SMSC products, and handle messages the size of the city s population of about 8 million each day.

In addition, China Unicom, which uses our CDMA products, means that we have 15% of the domestic market (in terms of lines). And for Xiaolingtong, which is a PHS-type technology, we have 40% market share, supporting more than 20 million subscribers in China.

What about your domestic and international presence?
Competitors such as Motorola, Ericsson, and Nokia are active in China and overseas, but I believe that ZTE can hold its own, and we can offer local operations with total solutions.

For example, on the domestic front, we can supply GSM/CDMA and PHS versus competition that can supply only one or two types, and that s very rare in the global market.

We re also well-prepared for 3G. For UMTS markets, we can supply commercial products for UMTS readily. When the Ministry of Information Industry held a 3G trial recently, we passed the test satisfactorily.

What do you think are unique selling points?
We place a lot of emphasis on the quality of our products; we are used to competition and grew up in a competitive market; and we tailor-make solutions, which is a great differentiator. ZTE can cater to customised requirements on time.

In Southeast Asia, a strategic market for us is Hong Kong.
We are confident of selling our mobile/data and multimedia products well. In Southeast Asia, multimedia is seen as a value-added service, and may play a dominant role in 3G.

We re also paying much attention to 3G. Through 3G, we can provide multimedia services to operators in Southeast Asia. 3G can change the structure of chain of vendors the smaller ones have an equal chance of success.

We have set up several field trials and pilots to convince operators the advantage of our 3G products. We provide preferential finance policies, as well as QOS, tech support, and business consultants to help operators succeed.